-5'3'S'5> 


ADDRESS  DELIVERED  BY  SAMUEL  SPENCER. 


Mr.  President  and  Members  of  the 


National  Association  of  Manufacturers  : 


It  has  frequently  been  said  that  this  is  essentially  an  age 
of  industry.  Certainly  within  the  past  generation  there 
has  been  greater  industrial  progress,  greater  growth 
and  diffusion  of  wealth  than  in  any  other  period  of  his- 
tory. In  this  activity  the  United  States  has  taken  the 
lead  of  the  world.  The  requirements  of  this  development 
and  the  consequent  advancement  of  the  arts  of  civilization 
have  been  beyond  the  powers,  physical  and  pecuniary,  of 
the  individual  or  the  co-partnership  under  which  the  industrial 
and  commercial  enterprises  had  previously  been  conducted. 
The  formation  of  corporations  to  take  the  place  of  the 
individual  or  copartnership,  and  the  subsequent  combination 
of  many  of  these  corporations  into  still  larger  ones,  have 
been  the  conspicuous  and  characteristic  features  of  this  evo- 
lution. Ours  is  not  only  an  age  of  industry,  but  it  is  the  age 
of  the  industrial  corporation  suddenly  and  enormously  devel- 
oped. 

The  process  has  gone  on  so  rapidly  and  to  an  extent  so  vast 
that  the  imagination,  especially  of  those  who  have  not 
actively  participated  in  the  transformation,  has  been  be- 
wildered. Mere  size  in  these  corporations  has  on  occasion 
been  construed  as  necessarily  meaning  wickedness  and  cor- 
ruption. The  mere  failure  to  comprehend  has,  in  many  in- 
stances, been  the  cause  of  unmerited  condemnation. 

Legislation  has  been  continuously  proposed,  and  to  an  ex- 
tent enacted,  to  control  or  to  regulate  the  formation  and  the 
operations  of  these  corporations. 

£ Such  legislation  was  first  directed  against  corporations 
engaged  in  the  business  of  common  carriers.  This  was 
iu  natural,  because  the  business  of  common  carriers  upon  a 
large  scale  in  this  country,  necessarily  from  the  beginning 
has  been  conducted  by  corporations,  instead  of  by  individ- 
uals or  firms,  and  because  the  common  carriers  performing 
quasi-public  service,  were,  properly  amenable  to  governmen- 


2 


tal  supervision  and  regulation.  Legislation  in  respect  of 
the  industrial  corporation,  embracing  now  so  largely  the 
manufacturing  and  commercial  interests  of  the  United  States, 
came  later. 

The  Act  to  Regulate  Commerce,  passed  by  Congress  in 
1887,  was  directed  towards  the  regulation  of  a certain  class 
of  common  carriers.  The  Anti-Trust  Act  of  1890,  known  as 
the  Sherman  Anti  Trust  Law,  was  supposed  at  the  time  of 
its  passage  to  be  directed  solely  against  the  so-called  trusts 
or  large  corporations  or  combinations  engaged  in  indus- 
trial pursuits  other  than  that  of  transportation.  The  two 
acts  wrere  intended  to  deal  severally,  one  with  the  func- 
tion of  transportation  conducted  by  common  carriers  by  rail  ; 
the  other  with  the  manufacture  and  sale  of  commodities. 

It  has  since  been  determined  by  judicial  decree  that  both 
acts  apply  to  the  common  carrier,  with  the  anomalous  and 
confusing  result  that  if  the  carrier  obey  one  law  he  runs  the 
risk  of  disobeying  the  other.  The  only  way  he  can  establish 
that  uniformity  and  stability  in  rates  demanded  by  the  one 
law  is  to  adopt  concurrent  action  which  may  be  forbidden  by 
the  other. 

The  Act  of  1890  was  intended  not  to  control  or  regulate, 
but  practically  to  suppress  the  growth  of  the  industrial  corpo- 
rations. 

Perhaps  the  most  striking  feature  of  industrial  conditions 
since  its  enactment  has  been  the  continuous  and  enormous 
increase  in  the  number  of  such  corporations,  their  almost 
uninterrupted  growth  in  wealth  and  efficiency  and  their  com- 
bination into  larger  units. 

Instead  of  being  suppressed,  these  powerful  agencies  for 
economy  and  usefulness  have  grown  until  they  practically 
represent  the  progressive  industry  of  the  country. 

Industry  and  commerce  are  now  carried  on  to  such  an 
extent  by  these  agencies  that  discussion  has  sometimes 
become  rife  as  to  whether  the  growth  of  corporate  influence 
and  power  does  not  menace  the  very  foundations  of  the 
Government. 

It  has  been  suggested  that  this  tendency  of  the  age 


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means  the  decay  of  the  individual  under  the  blighting 
shadow  of  the  corporation ; that  individual  effort  and  am- 
bition are  being  lessened  and  the  quality  of  citizenship  is 
suffering  in  the  process  ; that  that  mainspring  of  individual 
effort,  the  opportunity  to  own  property,  and  to  direct  its 
operations  and  enjoy  its  fruits,  is  being  dangerously  dimin- 
ished as  a factor  in  our  national  existence ; that  the  artificial 
citizen  is  taking  the  place  of  the  natural;  that  freedom  of 
individual  choice  and  individual  action  and  enterprise  in 
business  may  soon  be  a thing  of  the  past.  This  view  is  based, 
of  course,  upon  the  fact  that  many  firms  and  individuals 
have  changed  the  form  of  their  business  into  that  of  a cor- 
poration ; that  many  who  created,  owned,  and  personally 
directed  small  enterprises  have  now  become  merely  silent 
investors  in  the  larger  organizations  of  which  those  enter- 
prises have  become  part.  I have  no  doubt,  a majority  of 
the  corporate  organizations  represented  in  the  Manufac- 
turers’ Association  have  been  built  up  by  this  process. 

We  cannot  ascribe  to  the  idiosyncrasies  of  a period,  this 
wide-spread  tendency  towards  corporate  management.  While 
the  change  from  individual  to  corporate  direction  of  indus- 
try may,  in  some  cases,  be  due  to  force  of  circumstances, 
contrary  to  the  preference  of  the  individual,  there  are  tew 
exceptions  to  the  rule  that  the  change  has  been  the  result  of 
that  individual  choice  which  is  the  very  essence  of  industrial 
and  commercial  freedom.  In  such  a process,  if  the  individual 
has  suffered,  he  has  done  so  in  the  exercise  of  his  own  judg- 
ment, and  in  the  pursuit  of  his  interest  as  his  interest  then 
appeared. 

On  the  other  hand,  the  man  or  men  of  the  greatest  individ- 
uality, the  greatest  commercial  force,  have  remained  to  direct 
the  corporations,  and  the  men  of  superior  judgment,  force 
and  skill  are  finding  wider  scope  for  their  individuality  and 
activity  than  ever  before.  It  has  been  aptly  said  that  the 
corporation  is  but  the  individual  expanded. 

Whether  business  be  conducted  by  a person,  a firm,  or  a 
corporation  large  or  small,  it  is  the  ambition,  the  enterprise 
and  the  achievement  of  the  individual  that  make  it  successful. 

This  is  in  accordance  with  the  laws  of  nature,  the  laws  of 


4 


trade,  and  is  necessary  for  commercial  progress.  No  legis- 
lation for  governmental  direction  or  control  can  affect  the 
operation  of  these  laws  except  to  repress  activity,  to  circum- 
scribe commercial  growth,  and  thus,  if  not  to  bring  disaster, 
at  least  to  lessen  that  degree  of  prosperity  which  we  have 
now  attained,  and  to  limit  that  greater  field  of  achieve- 
ment which  we  are  otherwise  destined  to  occupy. 

The  spirit  of  industrial  and  commercial  combination, 
founded  on  the  fundamental  laws  of  economy  of  produc- 
tion and  of  cheaper  distribution,  can  never  suppress  or 
diminish  the  personal  activity  of  any  citizen,  except  of  one 
whose  natural  limitations  disqualify  him  for  successful  com- 
petition with  his  superior  neighbor.  So  long  as  that  compe- 
tition is  fair  and  legal,  the  individual  cannot  unduly  suffer. 
It  is  the  part  of  the  Government,  of  course,  to  see  that  the 
field  of  competition  is  kept  open  equally  to  all,  but  it  is 
not  its  province  to  bolster  up  the  fortunes  or  even 
the  opportunities  of  one  against  the  other.  Freedom  of 
endeavor  fosters  the  growth  of  the  individual,  whether  he 
chooses  to  conduct  his  business  personally  or  transfer  it 
to  a corporation.  On  the  other  hand,  there  is  nothing 
which  so  weakens  the  fibre  of  individuality  as  reliance  upon 
paternalism,  whether  governmental  or  otherwise,  for  sup- 
port in  the  struggles  of  life  in  which  manhood  is  built  up 
and  on  which  all  true  success  depends. 

If  we  must  choose  between  the  possible  weakening  of  the 
less  competent  by  transfer  of  activity  from  the  individual  to  the 
corporation,  and  the  weakening  of  all  individuals,  even  the 
most  capable,  through  socialism  or  governmental  paternalism, 
surely  the  part  of  wisdom  will  be  to  choose  the  former,  and  to 
thus  continue  the  free  exercise  of  individual  choice  and  of  the 
legitimate  laws  of  trade  and  commerce  upon  which  all  of  the 
substantial  and  useful  growth  of  the  world’s  industries  has  thus 
far  been  based. 

Yet  recent  tendencies  in  our  legislation  seem  to  threaten 
this  danger  of  sapping  the  strength  and  the  courage  and  the 
enterprise  of  the  individual  citizen.  Socialism  is  stalking 
abroad,  and  the  possibility  of  its  entrance  in  our  national  life 
clearly  and  distinctly  confronts  us. 


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The  recently  proposed  legislation  in  respect  to  fixing  rates 
of  transportation  by  the  United  States  Government  through 
one  Commission  for  the  entire  country  may  be  a most  signi- 
ficant beginning.  It  is  true  the  proposition  is  put  forward,  not 
with  the  avowed  purpose  to  fix  and  establish  the  prices  at 
which  transportation  is  to  be  sold,  but  under  the  guise  of  the 
correction  of  abuses,  by  granting  power  to  the  Commission 
to  substitute  in  a particular  case  a rate  or  price  which,  in  the 
judgment  of  the  Commission  is  just  or  reasonable  in  the 
place  of  one  judged  by  it  to  be  unjust  or  unreasonable. 

This  would  be  akin  to  the  Government  saying  to  manu- 
facturers that  you  are  charging  an  extortionate  price 
for  a product  and  must  hereafter  charge  only  a lesser 
price  to  be  fixed  through  Commission  or  otherwise.  If 
the  Department  of  Commerce  and  Labor  were  clothed  with 
power  to  set  aside  the  price  of  one  article  which  it  regarded 
as  extortionate,  and  substitute  therefor  a lower  one,  would 
not  that  be  the  power  to  ultimately  fix  the  prices  of  all  your 
products  ? The  right  to  name  one  price  is,  of  course,  the  right 
in  the  end  to  name  all,  and  the  right  to  name  all  may  mean,  if 
the  powTer  be  used,  the  absolute  suppression  of  that  enterprise 
which  now  finds  its  most  beneficent  activity  in  conducting  the 
great  and  ramifying  industrial  interests  of  this  country,  re- 
strained only  by  the  Constitution  and  the  common  law  and 
the  great  natural  laws  of  trade. 

I am  not  denying  the  power  or  the  right  or  the  policy 
of  governmental  regulation  by  proper  and  safe  methods  of 
the  performance  by  the  railways  of  their  public  duties. 

To  correct  abuses  is  one  thing,  to  supervise  and  direct 
the  earning  power  or  the  operations  of  a business  of  what- 
ever character  is  quite  another. 

I am  only  pointing  out  that  if  the  Government  in  its  reg- 
ulation of  common  carriers,  shall  go  beyond  the  point  of 
correcting  well-defined  abuses  and  unjust  discrimination, 
it  may  unintentionally,  possibly  unconsciously,  be  enter- 
ing upon  a policy  of  governmental  paternalism,  from  which 
retreat  will  be  difficult  if  not  impossible. 


6 


If  it  shall  do  so,  what  assurance  can  there  be  that  the  next 
step  in  such  a policy  may  not  be  similar  action  in  estab- 
lishing the  prices  at  which  manufactured  articles  shall  be 
sold. 

It  has  been  repeatedly  charged  that  the  Interstate  Com- 
merce Act  has  failed  in  its  purpose  for  the  suppression  of  re- 
bates and  unjust  discriminations,  and  it  is  argued  therefrom 
that  additional  power,  the  power  to  fix  future  rates  should  be 
granted  to  the  Commission.  It  may  be  true  that  the  rebates  and 
unjust  discriminations  have  not  entirely  disappeared,  although 
they  have  been  enormously  diminished.  It  is  also  true  that 
the  power,  ample  under  existing  law  for  their  suppression, 
has  not  been  fully  used,  and  it  is  equally  true  that  the  meas- 
ures recently  proposed  will,  if  adopted,  have  absolutely  no 
effect  as  a remedy  for  these  evils.  If  such  legislation  be  en- 
acted, the  first  and  possibly  fatal  step  in  industrial  paternal- 
ism will  have  been  taken,  whilst  the  evils  urged  as  an  argu- 
ment for  it  may  still  remain  uncorrected. 

The  case  of  the  manufacturer  and  the  merchant  under  the 
Anti-Trust  Law  of  1890  may  not  at  all  be  dissimilar.  The 
purpose  for  which  the  Act  was  passed,  the  suppression  of  the 
so-called  trusts,  has  certainly  not  been  accomplished.  The 
real  remedy,  the  application  to  the  courts,  and  the  detection 
and  punishment  of  violators  of  the  law,  has  no  more  been 
applied  under  the  Anti-Trust  Law  against  the  commercial 
and  industrial  corporations,  than  it  has  been  against  the  rail- 
way carriers  under  the  Act  to  Regulate  Commerce.  Industrial 
corporations  have  grown  and  prospered,  and  prices  of  com- 
modities have  risen  to  an  extent  far  greater  than  have  the 
prices  for  transportation.  May  not  the  corporate  manufac- 
turer or  the  corporate  merchant  be  confronting,  in  the  near 
future,  the  same  problem  with  which  the  carriers  have  been 
brought  face  to  face,  namely,  suggested  additional  legisla- 
tion on  the  plea  that  existing  legislation  has  not  accomplished 
its  purpose?  If  so,  if  the  precedent  is  established  that  a Com- 
mission shall  make  rates  for  the  railways,  may  not  the 
equally  illogical  and  harmful  step  follow  that  the  Government 
shall  make  prices  for  the  manufacturer  and  the  merchant  ? 


7 


The  remedy  for  corporate  evils  lies  not  in  suppression  nor 
in  undue  governmental  regulation  or  governmental  control. 
Suppression  by  statute  has  been  tried,  and  has  failed.  Gov- 
ernmental regulation  beyond  the  limits  of  correcting  irreg- 
ularities and  abuses,  means  a paternalism  which  will  sap  not 
only  the  energies  and  initiative  of  the  individual,  but  must 
retard  the  development  of  the  country,  and  may  possibly 
threaten  the  foundations  upon  which  free  Government  is 
based. 

The  remedy  lies  in  an  intelligent  and  thorough  recognition 
of  the  benefits  to  be  derived  from  large  corporate  instead  of 
small  individual  activity;  it  lies  in  throwing  the  searchlight  of 
public  knowledge  and  public  scrutiny  upon  all  corporate 
action  and  methods  which  can,  by  illegal  abuses  and  discrim- 
inations, inflict  injury  and  injustice  upon  others  of  equal  rights; 
it  lies  in  wise  and  judicious  laws  in  respect  to  the  formation 
of  corporations,  the  amount  and  character  of  their  capitaliza- 
tion and  the  scope  of  their  corporate  powers,  and  in  a system  of 
governmental  supervision  and  inspection  which  can  success- 
fulfy  detect  and  punish  all  infractions  of  the  law. 

It  lies  not  in  the  restriction  of  the  earning  power  or  the 
profits  of  corporations  thus  formed  or  thus  supervised.  The 
profits  of  corporations,  legitimately  organized,  and  legally 
and  honestly  conducted,  should  be  no  more  restricted  by  gov- 
ernmental action  than  the  profits  of  the  individual  engaged  in 
similar  pursuits. 

Under  such  conditions,  and  they  are  easily  attainable,  the 
well-managed  corporation  has  great  usefulness  for  the  good 
of  the  individual  citizen  and  of  the  entire  country,  and  in  it 
there  is  no  menace  to  the  structure  of  our  free  institutions. 

The  corporate  citizen  should  be  treated  as  is  the  natural 
citizen.  Its  crimes  or  misdemeanors  or  irregularities  should 
be  exposed  and  punished  or  corrected,  but  its  energies  and 
capacity  for  development  should  be  encouraged  by  that  free- 
dom of  opportunity  and  effort  which  under  our  free  institu- 
tions is  guaranteed  to  all. 

We  should  learn,  as  we  shall,  to  disregard  the  question  of 
mere  size,  and  to  look  at  the  substance,  the  character  and  the 


8 


actual  doings  of  the  corporations,  and  when  this  is  accom- 
plished, corporate  management  as  contrasted  with  that  of  the 
individual  will  cease  to  be  a bugbear. 

We  have  successfully  grappled  many  times  in  the  past  with 
difficult  and  perplexing  problems,  both  political  and  economic. 

Our  forefathers  were  pioneers  in  the  establishment,  under 
new  and  untried  and  often  discouraging  conditions,  of  a gov- 
ernment of  the  best  and  most  beneficent  character.  They 
were  pioneers  in  the  settlement  and  development  of  the 
wealthiest  of  continents.  Almost  within  our  own  generation 
we  have  been  the  pioneers  in  the  creation  of  a system  of 
national  transportation,  over  the  largest  areas,  affording  the 
lowest  rates,  and  the  highest  efficiency  which  the  world  has  ever 
known.  Within  the  memory  of  those  now  here  we  have  met 
and  permanently  solved  the  conflicting  questions  of  national 
finance,  which  at  times  threatened  the  national  credit,  if  not 
the  national  integrity. 

In  all  the  crises  which  have  yet  arisen  the  sound  common 
sense  and  conservative  character  of  the  American  people  have 
ultimately  triumphed,  and  the  nation  has  been  safely  guided 
through  the  impending  dangers. 

The  irresistible  march  of  commercial  progress,  has  now 
made  us  the  pioneers  of  the  world,  in  the  creation  and  de- 
velopment and  management  of  the  largest  industrial  organi- 
zations ever  known,  with  the  beneficent  result  that  their  pro- 
ducts are  more  cheaply  produced,  and  are  more  widely  and 
more  bountifully  distributed  than  ever  before.  Great  as  may 
be  the  responsibility  which  this  entails,  the  American  people 
as  they  always  have  been,  will  be  equal  to  a wise  and  conser- 
vative solution  of  the  problem,  without  loss  of  individuality 
in  the  citizen,  without  menace  to  the  free  institutions  of  our 
country  as  bequeathed  to  us  by  our  forefathers,  and  yet  with- 
out resorting  to  the  dwarfing  effect  of  governmental  paternal- 
ism, or  the  fatal  follies  of  socialism. 


